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Mr. SMITH. The assumption is that they are related functions and belong more appropriately to some other department, and in their administration that you will get, because of that relationship, some increased

efficiency: Mr. CHURCH. Who is responsible for inspiring these plans?

Mr. SMITH. Well, I do not know that I would commit myself to the proposition that these are inspired plans. Actually, there is no great mystery about these matters. We have had, in the Bureau of the Budget and in the Government, since 1939, when the Reorganization Act was first passed, various studies of organization of Government going on; and, as I say I should say, without checking specificallyabout half of these proposals come from the departments themselves.

Mr. CHURCH. Without any regard at all to the money to be saved as the result of these consolidations?

Mr. SMITH. I am sure that the head of the department felt he could increase the efficiency of the operation if he joined related activities within his department. I am sure that is true.

Mr. CHURCH. The question we must ask ourselves and answer to our constituents is: How much will be saved as a result of this consolidation or transfer or change?

Mr. SMITH. In connection with the last reorganization act we presented figures. I do not think that with this sort of thing you can present figures. You might say by this change you can get some increased efficiency, you eliminate certain positions. Then a new program comes along. All of these programs are, after all, Mr. Congressman, authorized by Congress, and we get into a very narrow debate as far as the Bureau of the Budget is concerned, and the responsibility of the President with respect to the Budget: “How much money does the operating department need to carry out those functions ? That is debated on the part of the administration very fully and more comprehensively than anyone believes who does not go through that process, and then it is debated before the Appropriations Committees in Congress. We get into trouble in saying that one of these plans will save a couple hundred thousand dollars and then find when the next proposal comes along-for instance, the Bureau of Marine Inspection and Navigation-because of the fact that the United States of America expanded its merchant marine and has new ships resulting from the war, and that you need 100 percent increase in inspectors. I would think that was a very unrealistic position. I would argue that these are administrative relationships; that if they have any effect whatsoever, they improve the administrative arrangement to the point where you get one or two things, considering first that you have a function to be carried out which is not changed, or does not expand. You see, you get into that problem where you have a function that today is carried out at a particular level, but then there is an urge to carry it out on a little higher level. Assuming the function does not change, you increase the efficiency in carrying it out. You do one of two things: Either you save money in terms of positions and materials, or, on the other hand, you get more for the money which you have spent. My own feeling is that in nearly all of these plans you get more for the money that is available.

Now perhaps when these programs come before the Bureau of the Budget again, or before the Congress, we may cut them; or we may

say that, because of these changes, there are adequate funds now for administration.

Mr. BENDER. The Bureau of the Budget is the right arm of the President, is that not correct—that is, the Bureau of the Budget comes directly under the President?

Mr. SMITH. We serve the President.

Mr. BENDER. Had the President said to you, "Last December 20 there was an act passed by Congress known as H. R. 4129," and has he said to you that that act provides, in so many words—it says, "over all reduction of at least 25 percent in the administrative cost of the agency or agencies affected"? Has the President said to you, “Now you go ahead and make recommendations in keeping with that provision”

Mr. SMITH. I do not wish to be in a position of answering your question and saying something as to what the reaction was, in terms of what the President said to me, but the President went over this act with great care while it was being developed and while it was in the Congress, and he has gone over these plans with great care and has chosen this particular set of plans to be presented to the Congress.

Mr. BENDER. These are the first three?
Mr. SMITH. Yes; that is right.

Mr. BENDER. Here it is June, and you are presenting us with these three plans, and you do not know how much money will be saved, if any, and the law that we passed specifically says that the reduction should be at least 25 percent. Yet, you do not know, as head of the Bureau of the Budget the right arm of the President, how much of a saving, if any, is effected?

Mr. SMITH. I do not think the law requires us to report on that. The CHAIRMAN. That is merely "a pious hope" that is section 2 of the law.

Mr. BENDER. Well, it is in the law.

The CHAIRMAN. Reading paragraph 2, section 2, it says, it is "the expectation” of the Congress that the transfer, consolidation, and coordination will result in a 25-percent cut.

Mr. BENDER. That is just like singing a hymn, like singing Onward, Christian Soldiers.

Mr. SMITH. In short, the law does not require the Director of the Budget to stick his neck out on a plan here; that is a proposal before Congress, as to how much that plan will save. Now I am not an oracle or a prophet, and I would rather not be in a position of a prophet. I am quite aware, as you are, of the hazards of prophecy around Washington. However, I do not wish to dodge your question; I wish to be perfectly frank about it; but I know those figures are not available. Also, I do not think they would amount to anything if they were presented to you, because they get thoroughly into the realm of prophecy. Once these plans are adopted, and we have some experience with administration, I think we can then measure the extent of the improvement in administration. I am sure that there will be an improvement in administration. If that were not so, there would be little point in bothering you with these plans or my arguing for them, or in the President taking time to go over them. I think there will be an improvement.

Mr. BENDER. I do not want to bore you with questions, but I have one thing in mind, and that is that we are endeavoring to economize

here, to achieve economy, and this consolidation and reorganization and coordination and transfer; and until we do that, what in the world are we driving at? Unless you have that as your chief objective, what in the world is this all about? Until we know entirely and definitely how much money will be saved as the result of this coordination, there is no point to all this.

Mr. CHURCH, Mr. Smith, there are agencies, are there not, that could go through this subject and measure your savings and give the Congress an opinion as to whether or not paragraph (c), section 2, could be lived up to as promised before we pass a bill of that kind? There are efficiency agencies that go into that sort of matter, are there not, reporting savings and possible savings?

Mr. SMITH. Yes; there are. My point, however, is, that this is very difficult to measure because you have a lot of factors. Mr. CHURCH. The whole point here is that it would be very

difficult to show that there are any savings; is that not true ?

Mr. SMITH. Yes; that is the difficulty.

Mr. CHURCH. I believe awhile ago you said that the National Housing group complained that private housing groups predominated. Do they still contend that?

Mr. SMITH. I would not know. The chairman raised the other point, and I was really making it clear that I heard the other kind of complaint.

Mr. CHURCH. Do you not think that in America private housing should still predominate?

Mr. SMITH. I would certainly think so, but I do not think it is a point that I should pass on as a matter of policy. What I would argue for, certainly, from the standpoint of development of governmental programs, is that these housing authorities be under one head. I would recommend that the programs developed by that general head would be presented to the President and to the Bureau of the Budget. Certainly there was a great deal of chaos when individual and separate programs were presented, and, naturally we felt that sort of thing in the Bureau of the Budget, too.

By putting these interests—let us say they are somewhat in conflict over housing—under a head where all of the issues can be debated and resolved, it seems to me you get a more healthy relationship between private and public housing and a much better governmental program insofar as the Government is interested. Obviously, we expect, I assume, that most of the housing will be done by private developers when the material and manpower is available.

Mr. CHURCH. You said that about half of these proposals often come from departments themselves. Is this proposal part V, National Housing Agency, recommended by the National Housing Administrator?

Mr. Smith. I do not know that. I would think possibly not, except as the previous Housing Administrator testified in general before the committees of Congress.

Mr. CHURCII. Do you know whether a suggestion has come from the Federal Housing Administrator?

Mr. SMITH. I do not know.

Mr. CHURCH. I would say private housing has less encouragement the more you centralize the power in NHA, would you not, than more encouragement !

Mr. SMITH, I do not know the answer to that. My own reaction would be that it has nothing to do with the issue. Mr. CHURCH. That seems to be the answer when we cannot obtain figures on savings or economies. Paragraph (c) says it is the expectation of Congress to make those savings of 25 percent in the administration, and so far we have not been furnished with that information. |Until that is furnished, I certainly believe that this committee should postpone such plan by reporting out the appropriate resolution to disapprove the plan, otherwise we are going in the direction of more federally controlled private building and private business. Mr. SMITH. I thought you were asking me a double-barreled question there, Mr. Congressman. Mr. CHURCH. Well, you are able to take both barrels and answer

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Mr. SMITH. What I did not wish to be drawn into is the question of policy, as to whether we have more or less private or more or less public housing. I do not think that has a thing to do with this proposal as I interpret it. What this does is continue an arrangement that has appeared to work very successfully. I do not know that it has been substantially challenged on that point. In addition, it does give the National Housing Administrator more authority. It is hard for me to argue against that principle. Therefore, as I See it, there certainly was no thought in the background of development of any of these plans that they affected any of the policy issued with respect to the programs involved. That this was an administrative arrangement that we were providing and that it would be an

| improvement over existing arrangements was what was intended.

Mr. CHURCH. I realize your difficulty.
Mr. JUDD. Do you know offhand how many agencies are abolished

\under these three plans: that is, by how much the number of Govern

ent agencies is reduced? r. SMITH. I cannot tell you exactly. I would think five or six. You would then have to go through the separate plans because there are parts of organizations abolished. For example, in the Organization Plan No. 1, the heading “State Department,” page 8, it says: Office of Inter-American Affairs and all the functions thereof and of the Director of the Office of Inter-American Affairs not otherwise disposed of herein are abolished. - - I would say there are five or six such cases. Mr. JUDD. That is whether there are agencies within one or the other of the 10 departments, or whether there are agencies outside the department, the total number abolished would be about five or six? Mr. SMITH. That is right. Mr. JUDD. Do you think there would be on an over-all picture, an abolition of personnel, a reduction of personnel? There will be five or six fewer agencies, but will there be a correspondingly great reduction in personnel? Mr. SMITH. There will be some reduction, obviously, and there you relate to, of course, decreases in the work loads of some of these agencies, more particularly to any organization arrangement, I would think. For instance, in the Office of Inter-American Affairs, you abolish some top positions here and put that agency in the State Department to be liquidated. I think that point came up a moment ago 2. * and I would be glad to answer it. There you have several corporations that have been financed by Qongress varying from a year or two ahead and they are to remain in the State Department until those programs are liquidated. Mr. JUDD. We now have something about the agencies. How many, if any, functions are abolished, or do you know? Mr. SMITH. I just do not know how many. There are not many, Mr. Congressman. There are not many functions involved here. Mr. JUDD. It is largely a reshuffle, is it not? Mr. SMITH. You have some that I would have to analyze, but in the main I should say, not many. The functions that are §: abolished come about more from adjustments under the war programs than under this. Mr. JUDD. Of course you will agree, Mr. Smith, that the major purpose of the committee and of the Congress in passing the reorganization bill, the main purposes were two: One was to reduce the size of the Federal Government and its functions, and the other was to get more efficiency in the administration of what we did have. Those were our two major objectives. I want to quote a sentence from Mr. Lindsay Warren's testimony when he was before us. When last December we were considering this Government Reorganization Act he testified as follows: What We must be after is this monstrous Frankenstein, created under the name

of bureaucracy or anything you please, but already in some instances becoming bigger than Congress, its creator.

Mr. Warren further says:

Sooner or later it will tumble of its own weight unless something is done to coordinate and check some of this. Now, we have an Executive who says he will do it. He says if he is given this authority he will do this job fairly and efficiently and fearlessly.

We gave a lot of weight to Mr. Warren's testimony and I am sure everybody felt there was going to be some real reduction in the Frankenstein, not just a consolidation and transfer of functions. I have been disappointed, frankly. It may make more efficient what we have but I feel strongly that whoever prepared this has not carried out what was unquestionably the objective of the committee and of the majority of Congress and that was to demobilize, if I may put it that way, the Federal Government in the same way we have had to demobilize the Army. There are a lot of functions, whatever was their original objective and justification, that are no longer needed. From your testimony, I do not gather there is much demobilization of the Federal Government.

Mr. SMITH. Mr. Congressman, I certainly feel there is a limit to which you can use this procedure for demobilization of the Government. You may be disappointed in this plan. I should say that I am always pleased if I see the chance of any gain in governmental administration because we have a constant struggle, the struggle of representative government and democracy to get these changes. We do not bat down people because they have different points of view. I should say that during the war we had a most effective Government, in the face of the results. We threw at our enemies everything including the kitchen stove. We are now going through a rather painful period. I could testify with quite some feeling on that, I believe, to

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